STA Travel is expected to seek the appointment of an examiner to the USIT group, possibly as early as today..

A spokeswoman for the Swiss-owned group, which took over the Irish student travel group last week, confirmed it planned to seek the protection of the courts.

Examinership would afford USIT a breathing space in which to try to reorganise its financial affairs. The firm will be protected from its creditors while the examiner attempts to put a rescue package together. The firm's financial crisis was precipitated by problems at its US subsidiary following the September 11th attacks.

National Irish Bank has already had a provisional liquidator appointed to the treasury operation of USIT group on foot of a debt of €3.38 million (£2.7 million), while Bank of Ireland has appointed a receiver to the UK operation, called USITCampus. The treasury operation is owed €120 million by other companies in the group and Mr Ray Jackson, the liquidator, will be a major creditor to the examinership.

Overall, the group employs 1,500 people in 66 countries, operating out of 200 offices. It has an annual turnover of $600 million (€694 million). USIT Now, the Irish arm of the group, insisted yesterday that students should continue to do business with it despite the financial crisis.

The chairman of USIT Now, Mr Richard Hammond, who is also president of USI, said USIT Now was a fully bonded student travel company and he urged students and their families to continue to trade with it.

"It is business as usual," he said. USIT Now had been taken over by STA and would continue to trade as normal, said Mr Hammond. "USI has been linked with USIT for over 40 years, and the company has proved itself time and time again as the premier operator of travel for Irish students. It is our hope and expectation that they will continue to do so for many more years to come," he said.

A spokesman for the Commission for Aviation Regulation said that if USIT was unable to discharge its responsibilities, students would be fully refunded for all costs because USIT Now was fully bonded or insured.

He said USIT Now had a fully comprehensive bond registered with the commission, and this covered not just holidays booked with USIT Now, but all other arrangements agreed with the firm. He said this would cover the J-1 visa programme which brings thousands of students to America each year.

Thousands of students have paid deposits for their J-1 programme already, and some have paid for this working holiday in full. The commission spokesman said if USIT Now was unable to continue to trade, the commission would step in and pay all the students' costs, including the cost of returning home.

Sources said the Irish operation, highly profitable in recent years, was likely to survive any rationalisation by STA because STA had very little business here.

USI sold its shares in USIT Now and USIT World last year. It has several commercial arrangements with USIT Now, including sponsorship of an international student card along with USIT.